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Chapter 5Chapter 5

Electronic CommerceElectronic Commerce

Strategies for the New EconomyStrategies for the New Economy

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Presentation OverviewPresentation Overview

The Growth of E-CommerceThe Growth of E-Commerce The Advantages of Business To The Advantages of Business To

Consumer E-CommerceConsumer E-Commerce Keys To Success in Business To Keys To Success in Business To

Consumer E-CommerceConsumer E-Commerce Business To Business E-CommerceBusiness To Business E-Commerce The Role of E-GovernmentThe Role of E-Government E-Commerce Payment SystemsE-Commerce Payment Systems

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Opening Case StudyOpening Case StudySodas and Snack Food on the WebSodas and Snack Food on the Web

Soda and snack foods are one of the last Soda and snack foods are one of the last things we would consider buying on-line things we would consider buying on-line because they are available on nearly because they are available on nearly every street corner.every street corner.

How can products that are easily available How can products that are easily available take advantage of generating sales on the take advantage of generating sales on the Internet?Internet?

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The Growth of E-CommerceThe Growth of E-Commerce

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E-commerce – E-commerce – is commerce, but it is is commerce, but it is commerce accelerated and enhanced by commerce accelerated and enhanced by IT, in particular the Internet.IT, in particular the Internet.

Demand aggregation – Demand aggregation – combines combines purchase requests from multiple buyers purchase requests from multiple buyers into a single large order, which justifies a into a single large order, which justifies a discount from the business.discount from the business.

The Growth of E-CommerceThe Growth of E-Commerce

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The Growth of E-Commerce The Growth of E-Commerce The Digital DivideThe Digital Divide

Digital divideDigital divide - expresses the fact that different - expresses the fact that different peoples, cultures, and areas of the world or peoples, cultures, and areas of the world or within a nation do not have the same access to within a nation do not have the same access to information and telecommunications information and telecommunications technologies. technologies.

Global digital divideGlobal digital divide - - specifically describes the specifically describes the differences in IT access and capabilities differences in IT access and capabilities between different countries or regions of the between different countries or regions of the world. world.

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The Advantages of Business To The Advantages of Business To Consumer E-CommerceConsumer E-Commerce

The Internet’s most prominent advantages The Internet’s most prominent advantages are:are:1.1. Shopping can be faster and more convenient.Shopping can be faster and more convenient.2.2. Offerings and prices can change Offerings and prices can change

instantaneously.instantaneously.3.3. Call centers can be integrated with the Web Call centers can be integrated with the Web

site.site.4.4. Broadband telecommunications will enhance Broadband telecommunications will enhance

the buying experience.the buying experience.

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The Advantages of Business To The Advantages of Business To Consumer E-CommerceConsumer E-Commerce

Shopping Can Be Faster and More ConvenientShopping Can Be Faster and More Convenient

E-tailerE-tailer - an Internet retail site. - an Internet retail site.

Pure playsPure plays - - Internet retailers without a physical store.Internet retailers without a physical store.

Clicks–and-mortarClicks–and-mortar retailers - both an Internet presence retailers - both an Internet presence and one or more physical stores. and one or more physical stores.

M-commerceM-commerce - - describes e-commerce conducted over a describes e-commerce conducted over a wireless device such as a cell phone or PDA. wireless device such as a cell phone or PDA.

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The Advantages of Business The Advantages of Business To Consumer E-CommerceTo Consumer E-Commerce

Call Centers Can Be Integrated With the Call Centers Can Be Integrated With the Web SiteWeb Site

Interactive chatInteractive chat - - lets you lets you engage in real-time typed engage in real-time typed exchange of information. exchange of information.

Internet telephonyInternet telephony - - a a combination of hardware and combination of hardware and software that uses the Internet software that uses the Internet transmission of telephone calls.transmission of telephone calls.

On Your Own

B2C Services(p. 250)(p. 250)

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The Advantages of Business The Advantages of Business To Consumer E-CommerceTo Consumer E-CommerceBroadband Telecommunications Will Broadband Telecommunications Will

Enhance The Buying ExperienceEnhance The Buying Experience

Purchase a full-length feature film and download it in Purchase a full-length feature film and download it in minutes.minutes.

Travel sites will offer full-motion video tours of vacation Travel sites will offer full-motion video tours of vacation destinations.destinations.

Automobile buying sites will be able to offer virtual test Automobile buying sites will be able to offer virtual test drives to let you narrow down your choices before you drives to let you narrow down your choices before you take the time to visit an auto dealership.take the time to visit an auto dealership.

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The Advantages of Business The Advantages of Business To Consumer E-CommerceTo Consumer E-Commerce

Team Work

Broadband Services:Where Do You Place Your Bets?

(p. 251)(p. 251)

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Keys To Success In Business Keys To Success In Business To Consumer E-CommerceTo Consumer E-Commerce

1 - Commoditylike Items Work Best1 - Commoditylike Items Work Best

People tend to be more comfortable People tend to be more comfortable buying items on the Internet that are buying items on the Internet that are commoditylike, that is, uniform. commoditylike, that is, uniform.

People tend to be less comfortable buying People tend to be less comfortable buying “high touch” items on the Internet such as “high touch” items on the Internet such as furniture. furniture.

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Keys To Success In Business Keys To Success In Business To Consumer E-CommerceTo Consumer E-Commerce

2 - Digital Products Are the Best of All2 - Digital Products Are the Best of All Micro-paymentsMicro-payments - techniques to facilitate the exchange - techniques to facilitate the exchange

of small amounts of money for an Internet transaction.of small amounts of money for an Internet transaction. Reasons digital products are best:Reasons digital products are best:

1.1. They are commoditylike products.They are commoditylike products.

2.2. They can be mass-customized and personalized.They can be mass-customized and personalized.

3.3. They can be delivered at the time of purchase.They can be delivered at the time of purchase.

4.4. They foster disintermediation.They foster disintermediation.

5.5. They have global reach.They have global reach.

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Keys To Success In Business Keys To Success In Business To Consumer E-CommerceTo Consumer E-Commerce 3 - Attracting and Retaining Customers3 - Attracting and Retaining Customers

Marketing mixMarketing mix - the set of marketing - the set of marketing tools that the firm uses to pursue its tools that the firm uses to pursue its marketing objectives in the target market.marketing objectives in the target market.

1.1. Registering with Search EnginesRegistering with Search Engines• Meta tagsMeta tags

2.2. Online AdsOnline Ads

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Keys To Success In Business Keys To Success In Business To Consumer E-CommerceTo Consumer E-Commerce 3 - Attracting and Retaining Customers3 - Attracting and Retaining Customers

3.3. E-Mail and Viral MarketingE-Mail and Viral Marketing SpamSpam Viral marketingViral marketing

4.4. Affiliate ProgramsAffiliate Programs Affiliate programsAffiliate programs Click-throughsClick-throughs

5.5. Selling to Existing CustomersSelling to Existing Customers Conversion rateConversion rate

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Keys To Success In Business Keys To Success In Business To Consumer E-CommerceTo Consumer E-Commerce

4 - Remember the Importance of 4 - Remember the Importance of MerchandisingMerchandising

A B2C business must do an effective job A B2C business must do an effective job of merchandising. of merchandising.

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Keys To Success In Business Keys To Success In Business To Consumer E-Commerce To Consumer E-Commerce

5 - You Must Execute Well5 - You Must Execute Well

Executing well simply means that when a Executing well simply means that when a customer places an order on your Web site, you customer places an order on your Web site, you have to follow through and execute the have to follow through and execute the necessary business processes to get the right necessary business processes to get the right item to the customer in a timely fashion. item to the customer in a timely fashion.

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Keys To Success In Business Keys To Success In Business To Consumer E-CommerceTo Consumer E-Commerce

6 - Watch the Competition6 - Watch the Competition

Retaining customers is one of the keys to Retaining customers is one of the keys to e-commerce success.e-commerce success.

Spend time on the Web surfing around Spend time on the Web surfing around seeing what’s going on in your competitive seeing what’s going on in your competitive space by looking at the Web sites of space by looking at the Web sites of known competitors.known competitors.

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Keys To Success In Business Keys To Success In Business To Consumer E-CommerceTo Consumer E-Commerce

6 - Watch the Competition6 - Watch the Competition

Team Work

Evaluating CompetingWeb Sites

(p. 258)(p. 258)

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Business to Business Business to Business E-CommerceE-CommerceValue NetworksValue Networks

IntermediariesIntermediaries - specialist companies - specialist companies that provide services better than their that provide services better than their client companies can themselves. client companies can themselves.

ComplementorsComplementors - - provide products provide products and services that complement the and services that complement the offerings of the enterprise. offerings of the enterprise.

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Business to Business Business to Business E-CommerceE-Commerce Value NetworksValue Networks

Value networkValue network - all of - all of the resources behind the resources behind the click on a Web the click on a Web page that the customer page that the customer doesn’t see, but that doesn’t see, but that together create the together create the customer relationship.customer relationship.

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Business to Business Business to Business E-CommerceE-Commerce

Corporate Purchasing SegmentsCorporate Purchasing Segments Direct materialsDirect materials - - used in production in a used in production in a

manufacturing company or for retail sales.manufacturing company or for retail sales.

Indirect materialsIndirect materials - necessary for running a - necessary for running a corporation, but do not relate to the primary business corporation, but do not relate to the primary business activities. activities.

Electronic data interchange (EDI)Electronic data interchange (EDI) - computer-to- - computer-to-computer transfer of transaction information.computer transfer of transaction information.

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Business to Business Business to Business E-CommerceE-Commerce

Corporate Purchasing SegmentsCorporate Purchasing Segments

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Business to Business Business to Business E-CommerceE-Commerce

Corporate Purchasing SegmentsCorporate Purchasing Segments Virtual private Virtual private

network - network - uses uses software to establish software to establish a secure channel on a secure channel on the Internet for the Internet for transmitting data. transmitting data.

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Business to Business Business to Business E-CommerceE-Commerce

Corporate Purchasing SegmentsCorporate Purchasing Segments

XML (eXtensible Markup Language)XML (eXtensible Markup Language) - - a a coding language for the Web that lets coding language for the Web that lets computers interpret the computers interpret the meaningmeaning of of information in Web documents. information in Web documents.

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Business to Business Business to Business E-CommerceE-Commerce

Corporate Purchasing SegmentsCorporate Purchasing Segments

ebXML -ebXML - a set of technical a set of technical specifications for business specifications for business documents built around documents built around XML.XML.

Web ServicesWeb Services - - software software applications that talk to applications that talk to other software applications other software applications over the Internet. over the Internet.

On Your Own

A Range of PossibilitiesFor Next-Generation EDI

(p. 265)(p. 265)

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Business to Business Business to Business E-CommerceE-CommerceB2B MarketplacesB2B Marketplaces

B2B marketplacesB2B marketplaces - - Internet-based services Internet-based services that bring together buyers and sellers.that bring together buyers and sellers.

Reverse auctionReverse auction - - the process in which a buyer the process in which a buyer posts its interest in buying a certain quantity of posts its interest in buying a certain quantity of items, and sellers compete for the business by items, and sellers compete for the business by submitting successively lower bids until there is submitting successively lower bids until there is only one seller left. only one seller left.

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Business to Business Business to Business E-CommerceE-Commerce

Intranets and ExtranetsIntranets and Extranets IntranetIntranet - an internal organizational Internet. - an internal organizational Internet.

ExtranetExtranet - an intranet that is restricted to an - an intranet that is restricted to an organization and certain outsiders.organization and certain outsiders.

Customer relationship management (CRM) Customer relationship management (CRM) systems - systems - use information about customers to use information about customers to gain insights into their needs, wants, and gain insights into their needs, wants, and behaviors in order to serve them better. behaviors in order to serve them better.

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The Role Of E-GovernmentThe Role Of E-Government

E-GovernmentE-Government - describes the application - describes the application of e-commerce technologies in of e-commerce technologies in governmental agencies.governmental agencies.

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E-Commerce Payment SystemsE-Commerce Payment Systems

Financial EDI (FEDI) – Financial EDI (FEDI) – use ofuse of EDI for payments. EDI for payments.

Smart cardsSmart cards - - plastic cards the size of a credit plastic cards the size of a credit card that contain digital information. card that contain digital information.

Financial cybermediariesFinancial cybermediaries - Internet-based - Internet-based companies that make it easy for payments over companies that make it easy for payments over the Internet. the Internet.

Electronic Bill Presentment and Payment Electronic Bill Presentment and Payment (EBPP)(EBPP) systems - bills over the Internet. systems - bills over the Internet.

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Closing Case StudiesClosing Case Studies

eBags: An E-Commerce Success StoryeBags: An E-Commerce Success Story How has eBags gained a competitive advantage over How has eBags gained a competitive advantage over

traditional bricks-and-mortar retailers of bags and traditional bricks-and-mortar retailers of bags and accessories?accessories?

Making Toyota’s Vision a RealityMaking Toyota’s Vision a Reality What advantages will Toyota gain by implementing What advantages will Toyota gain by implementing

this system?this system?

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Summary Summary Assignments & ExercisesAssignments & Exercises

1.1. Developing m-commerce scenarios for Developing m-commerce scenarios for GPS cell phonesGPS cell phones

2.2. Dealing with the global digital divideDealing with the global digital divide

3.3. Alternatives for personalized digital Alternatives for personalized digital musicmusic

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